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Does Nestle need to "Take a Break" on its shape mark application?

Finally we have European guidance on the registrability issues that are the subject matter of the dispute between chocolate giants Nestlé and Cadbury. The dispute arose from Nestlé's application to register the shape of its Kit Kat chocolate bar as a 3D trade mark. 

Background

After many years of use of the four fingered Kit Kat shape, Nestlé filed, in 2010, a UK trade mark application to register a 3D mark in class 30 in respect of a number of goods including "chocolate" and "chocolate confectionary" among others. 

Looking at the legal background to the examination of the application (Article 3 of the Trade Mark Directive 2008/95), a trade mark can be registered as long as it is not:

  • devoid of any distinctive character (Art 3(1)(b)); or
  • Art 3(1)(e), a sign that consists exclusively of shape which (i) results from the nature of the goods themselves; or (ii) is necessary to obtain a technical result.

However, these objections can be overcome if the trade mark acquires a distinctive character due to the use made of it (Article 3(3)). 

The application was accepted by the Intellectual Property Office (IPO) on the basis that, although inherently indistinctive, the mark had acquired distinctive character through use. However, it was subsequently successfully opposed by Cadbury as the mark was held to be devoid of distinctive character (either inherent or acquired) and its shape was necessary to obtain a technical result.

Nestlé appealed this decision to the UK High Court, which referred a number of questions to the Court of Justice of the European Union (CJEU) relating to acquired distinctiveness and shape marks - Case C-215/14 Société des Produits Nestlé SA v Cadbury UK Limited.

Questions, questions...

The High Court had identified three essential features to a Kit Kat shape: the rectangular slab shape, the presence and depths of the longitudinal grooves and the number of grooves to create four fingers.

In its questions to the CJEU, the High Court asked the following questions:

  • To establish acquired distinctiveness, is it sufficient to prove that a significant proportion of the relevant class of persons associate the mark with the applicant or must the applicant prove that a significant proportion of the relevant class of persons rely upon the mark as indicating the origin of the goods (as opposed to any other trade marks which may also be present)? 
  • Where a shape consists of three essential features: one of which results from the nature of the goods themselves (rectangular slab) and two of which (the groove related features) are necessary to obtain a technical result, is registration of that shape as a trade mark precluded by Article 3(1)(e)(i) and/or (ii)? 
  • Should Article 3(1)(e)(ii) preclude registration of shapes which are necessary to obtain a technical result with regard to the manner in which the goods are manufactured as opposed to the manner in which the goods function?

CJEU decision

The CJEU dealt firstly with questions two and three and later turned its attention to the issue of acquired distinctiveness. 

In relation to question two, the CJEU confirmed that the criteria within Article 3(1)(e) operate independently and cannot be applied in combination. Where there is more than one element to a shape (as with the Kit Kat), different criteria cannot be applied to different elements of the shape. One of the criteria must apply fully to the shape as a whole (and not to its individual elements) for Article 3(1)(e) to be applied. 

In relation to question three, the CJEU confirmed that the technical nature of a shape applies only to the way the goods function and not to the way they have been manufactured. The CJEU noted the purpose of Article 3(1)(e)(ii) is to prevent a registrant gaining a monopoly on the functionality of a product.

Finally, on acquired distinctiveness, the CJEU confirmed that the essential function of a trade mark is to enable a consumer to identify goods as originating from a particular undertaking and to distinguish those goods from those of another. In order to prove acquired distinctiveness through use, an applicant must prove that the relevant class of persons perceive that the mark applied for alone (as opposed to any other marks that may also be present) allows them to identify the undertaking from which the goods originate. 

Comment 

The key point from this ruling is that the CJEU has focussed the test for acquired distinctiveness on consumer perception rather than consumer reliance ie you do not have to consider actual consumer behaviour in the marketplace but rather whether or not a mark can be perceived as an indicator of origin. This is a much easier test than having to prove that a mark has already been relied on by consumers as an indicator of origin. 

The decision should also be welcomed by those hoping to register 3D shapes as the technical result exclusion has been narrowly interpreted by the CJEU.

The case will now be referred back to the High Court to make a decision as to whether or not the registration of the 3D shape mark for the Kit Kat should be allowed. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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